Candlestick charts: what a single candle shows
· beginner
Automated material · TradeAlmanac editorial deskDraft prepared by a language model from our stored data; not reviewed by an editor.
A candle encodes a period's price behaviour in four numbers and does so more compactly than any table.
The construction
The body is the distance between the open and the close. The wicks mark the high and the low of the period. The colour shows whether the close was above the open or below.
What can be read from it
A long body means the movement was directional. A short one with long wicks means the price travelled both ways and came back.
A long lower wick says an attempt to push the price down was bought up; an upper one says a rise was sold.
Choosing the period
The same history looks different on different timeframes. A daily candle smooths intraday thrashing; an hourly one displays it.
For an investor with a horizon in years the daily chart is more informative than the hourly one simply because decisions are made less often.
What candles do not show
Volume — it is displayed separately. The reason for a move. And context: the same candle after a long rise and after a long fall mean different things.
The practical use
A quick overview of price behaviour and of the levels where reversals happened. For an investor it is a way of choosing the moment to execute a decision already made, not a way of making one — The limits of technical analysis.
Draft prepared by a language model from our stored data; not reviewed by an editor.
Model: claude-opus-5
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